Progressive Investment plan – Overview

Investment is the term given to purchase a good/ an asset to generate an income not for today’s consumption but for tomorrow’s asset creation. Good investment planning paves a way to turn your dreams and aspirations into reality.

Progressive Investment Plan

Progressive Investment Plan is a 2-in-1 investment program that gives you the opportunity to find the investment that meets your financial personality and objectives. Here, funds are divided equally depending on the duration of each investment plan, where one part of the fund is invested in equity and the others remain in time deposit on a monthly basis.

Progressive investment options in Malaysia

There are a wide variety of investment options available in Malaysia. Let us take a look at it in detail.

Fixed Deposit

Fixed Deposits or Time Deposits offer a fixed and guaranteed rate of return on your investment. Almost all banks in Malaysia offer these types of accounts. Fixed deposits offer significantly higher interest rates than savings accounts while minimizing the risk associated with other high-risk investment products.

Unit Trust

Unit Trust is a form of collective investment that allows investors with similar objectives to pool their funds for investment. These provide small investors a chance to invest in stocks, shares, bonds and other capital-market instruments. Their professional management, high liquidity and small entry requirements make them attractive to investors. Unit trusts enable investors with limited time and knowledge to take advantage of the higher returns from the capital markets.

Gold Investment

Gold forms another great investment avenue. It has been an asset since the beginning of mankind’s evolution and across cultures. So, it is not surprising that gold is a favoured asset here in Malaysia as well. Gold investment can be made either in physical form or by means of “paper gold”. Physical Gold investments can be made by buying gold jewellery, gold coins, gold wafers and gold bars from jewellers. Investing in paper form is via Gold Investment Accounts of some banks.

An important point that investors should be aware of is that there will always be a difference between the selling and buying price of gold. This difference represents the profit for the Gold Trading organization. So, if you wish to ensure a profit make sure that the price at which you are selling is higher than the price at which you bought the gold.

No one can predict when the market rate will rise or fall and it depends on the market conditions. So invest a fixed sum of money regularly over a fixed period regardless of market conditions. These investment plans helps you to Invest progressively to manage market volatility.

Make An Investment Plan For Your Post-Retirement

Make an Investment Plan for your post-retirement

Make an Investment Plan for your post-retirement

A well-planned retirement is key to an active, happy life during the post-retirement years. However, various studies and surveys have a disturbing message: many Malaysians are not planning / saving enough to fund their post-retirement life. Compounding this, many Malaysians believe that either the government or their children will take care of them.

But with the government rolling back competition-constricting subsidies and the rising cost of living making it difficult for even the most filial of children to look after their parents in comfort, retirement planning has assumed increased importance. Let’s take a look at a few pointers that could help you plan for your retirement:

How much would you need?

Financial experts use a rule-of-thumb figure of 80% to compute the income required post-retirement. 80% represents the percentage of current income you may require. This could vary upwards or even downwards (but don’t bet on it!).

Factor in inflation

One crucial mistake that many people make is that they fail to figure in inflation. Rising inflation can make major inroads into your post-retirement income; you could very easily find yourself without sufficient income to meet all your needs after your retirement. It is also important for you to factor in the increased life expectancy of Malaysians and a possible increase in care costs for the elderly.

How long do you have?

Deduct your current age from the age when you expect to retire. This is the time period you have to build up your retirement corpus.

Calculate your retirement requirement

Use the formula M = P (1+I)n to calculate your annual expenditure after retirement. Here P stands for 80% (going by the rule-of-thumb figure discussed above) of your current annual income, I for the inflation rate and n stands for the time period in years discissed above.

Building up your corpus

Now that you’ve determined the amount that you would need after retirement it is time to plan and build a corpus that will generate the computed income for you. Here is how you could go about it:

Start early – One of the best ways of building up a good retirement corpus is by starting to save early, preferably when you are in your early 20s and have started working. An early start will enable you to save more, to harness the power of compounding and to take a few well-calculated risks with higher return possibilities to help you build a bigger corpus.

Use a diversified portfolio – Build a well-diversified investment portfolio that includes not just fixed deposits but also bonds, REITs, Unit Trusts, equities, ETFs, gold-related investments, annuities, property etc.

Such a portfolio will keep your investments growing at a reasonable rate while also mitigating risks of one asset class falling due to a crash in it’s market. Also, make sure that you understand the tax implications of your various asset holdings. You should also be sufficiently covered through life, health, vehicle, property and other insurance.

Make use of savings schemes – Both the EPF (Employees’ Provident Fund) and the newer, voluntary PRS (Private Retirement Scheme) are great for helping you build a retirement corpus in a disciplined manner while offering tax advantages.

Consult a financial advisor – Understanding the various asset classes while putting together a structured investment plan in tune with your needs is not an easy task. An experienced, well-qualified financial advisor can help you put together a good investment plan given your current life and financial realities.

Just make sure that your advisor is a Registered Financial Planner (RFP) as conferred by the Malaysian Financial Planning Council (MFPC) and that the advisory organization he is with is appropriately licensed under the Insurance Act and the Insurance Regulations as per the 2005 amendment.

Why Do We Need To Invest In Gold

investing in gold

Why do we need to invest in Gold

Gold as an asset class

Historically, gold as an asset has always been in a class of its own. Its bright yellow colour made it attractive to look at; its high ductility and malleability enabled it to be worked upon in myriad ways; it is stable and has high resistance to corrosion (it can resist attacks by many acids) and most other chemical reactions; all these factors made it the metal of choice for fashioning jewellery across cultures across ages. With the coming of the Industrial Revolution, gold’s property as an excellent conductor of electricity made it an even more valuable.

In economic terms, gold has, from early times, been used as a store of value. It thus fulfilled the value of money especially given the highly volatile nature of non-gold currencies. This is also why it has been used as a hedge against inflation.

There are other reasons for gold’s attractiveness as an investment: gold prices are available for more than a hundred and fifty years enabling far deeper study by investors. Gold’s lack of correlation to other asset classes like stocks and bonds means that gold can be used effectively to diversify portfolios. In general, many financial consultants recommend keeping 4-12 percent of a portfolio in the form of gold. And, in recent times gold has become far more accessible thus enhancing its investibility.

Gold investment avenues in Malaysia

Malaysians can invest in either physical gold or “paper” gold.

Physical Gold

Physical Gold investments can be made by buying gold jewellery, gold coins, gold wafers and gold bars from jewellers. Gold jewellery incurs workmanship charges while the purity of coins or bars vary from jeweller to jeweller.

Investments in gold can also be by means of the Kijang Emas or the Kelantan Gold Dinar. Kijang Emas are the Malaysian Gold Bullion coins issued by the Bank Negara Malaysia. Kelantan Gold Dinars are being issued by the Kelantan State Government since 2006. One Dinar refers to a gold coin of 4.54 grams and has a composition of 22 carat gold (916 purity). The Dinars are available in 1, 1/2 and 1/4 Dinars. The advantage of investing in these gold bullion coins is that you are assured of the purity and composition of the gold that you are holding.

Investing in physical gold carries with it storage costs and the risk of loss due to theft, robbery etc.

Paper Gold – Gold Investment Accounts

Malaysians can also invest in gold through Gold Investment Accounts. Some banks in Malaysia allow anyone to open such an account; the account balance is measured in grams of gold rather than in terms of a currency. This allows an investor to make deposits when prices are favourable and withdraw funds at a profit, when prices rise. The investor can even opt to receive physical gold instead of cash when they withdraw funds.

Islamic Gold Investment Accounts are also available. These accounts are Shariah-compliant and are based on the principles of Bai’ As-Sarf & Qardh.